Market Newsdesk

STAMFORD, Conn., July 28, 2021 /PRNewswire/ —

Second Quarter 2021 Financial Highlights:

• Record revenue of $927 million increased 4 percent sequentially, driven primarily by 5 percent higher TiO₂ average selling prices and 5 percent higher zircon average selling prices
• Income from operations of $150 million; Net income of $77 million
• GAAP earnings per share of $0.46; Adjusted diluted EPS of $0.61 (Non-GAAP); the difference is due to second quarter debt extinguishment costs
• Adjusted EBITDA of $237 million, in line with guidance; Adjusted EBITDA margin of 26 percent (Non-GAAP); sequential improvement driven primarily by increased TiO₂ and zircon selling prices
• TiO₂ sales volumes increased 1 percent sequentially, driven by continued recovery led by North America and Europe
• Zircon sales volumes continue to be very strong, but declined 5 percent sequentially from record first quarter levels as expected

Strong Financial Position and Cash Flow:

• Generated a record $150 million in free cash flow in the second quarter after investing $60 million in capital expenditures
• Continued deleveraging with debt repayments of $135 million in the second quarter and $70 million completed in July for a total of $205 million, reducing total debt to $2.8 billion

Dividend Increase and Third Quarter Outlook:

• Board declared a quarterly dividend of $0.10 per share representing an increase in the quarterly dividend rate of $0.02 per share, equating to a $0.40 per share annual dividend, reflecting the Board’s confidence in the business model and cash flow generation capabilities
• The quarterly dividend will be payable on Friday, September 10, 2021, to shareholders of record of the Company’s ordinary shares at the close of business on Monday, August 9, 2021
• TiO₂ and zircon prices expected to continue to increase
• TiO₂ sales volumes expected to decline 5-10 percent sequentially from record second quarter levels, due to supplier and logistics constraints
• Zircon sales volumes expected to remain elevated above 2019 and 2020 quarterly volume levels, benefiting from sales from inventory, though lower than second quarter 2021 levels
• Adjusted EBITDA expected to increase to $245–$260 million despite anticipated lower sales volumes and increased production costs which will be partially offset by expected price improvements and the roll off of second quarter operational disruptions

Tronox Holdings plc (NYSE:TROX) (“Tronox” or the “Company”), the world’s leading integrated manufacturer of titanium dioxide pigment, today reported its financial results for the quarter ending June 30, 2021, as follows:

Tronox achieved another record quarter of TiO₂ volumes and key financial metrics including revenue, EPS, Adjusted EBITDA, and free cash flow.  Second quarter revenue increased 4 percent sequentially, primarily driven by higher TiO₂ and zircon average selling prices. TiO₂ sales volume grew 1 percent sequentially led by growth in North America and Europe.  Increases in TiO₂ selling prices in all regions resulted in a 5 percent sequential improvement globally.  Revenue from zircon sales decreased 2 percent sequentially, as improved pricing was partially offset by lower volumes, as expected.  Tronox delivered Adjusted EBITDA of $237 million, another record achievement for the company.  Adjusted EBITDA margin was 26 percent. 

Commenting on these results, John D. Romano, co-chief executive officer, stated, “Jean-François and I are pleased with our solid second quarter performance, which was in line with the guidance we issued in April.  TiO₂ volumes came in within the range, albeit at the low end, mainly due to supply chain challenges that limited vessel and container availability at a time when inventories were already at abnormally low seasonal levels.  We successfully implemented planned regional pricing initiatives for both TiO₂ and zircon, offsetting headwinds from unfavorable foreign exchange rates, inflationary pressures, and operational disruptions that we foreshadowed on our first quarter earnings call.  This included EBITDA headwinds of $10 million from the planned maintenance shutdown of our synthetic rutile production facility and $4 million from longer than anticipated downtime at our Botlek pigment plant due to an extended supplier shutdown, as well as $5 million from unexpected downtime at our Stallingborough pigment plant due to mechanical issues, each of which will roll off in the third quarter.”

Jean-François Turgeon, co-chief executive officer, added, “We believe we are still early in the cycle.  Regional pricing initiatives are continuing across both TiO₂ and zircon.  Demand remains very strong driven by a recovery across all of our end markets, and we are working very hard to support the demand of our customers. For the third quarter, we are balancing strong customer demand against our ability to deliver based on continued supplier and logistics constraints.  Taking these factors into consideration, we expect TiO₂ volumes to decline 5-10 percent sequentially, which still represents growth compared to third quarter volumes in 2020, 2019, and 2018.  Zircon sales volumes are expected to remain elevated above 2019 and 2020 quarterly volume levels, benefiting from sales from inventory, though lower than second quarter 2021 levels.  Zircon pricing improvement in the third quarter is expected to more than offset the volume headwind.  While the operational disruptions from the second quarter will roll off, continued pressures on the cost side of the business from inflation and raw material price increases, as well as chlorine availability issues, are expected to partially offset continued price increases in the third quarter.  As a result, we anticipate Q3 2021 Adjusted EBITDA of $245–$260 million.”

Mr. Romano added, “This is a critical time for Tronox.  While overcoming these various challenges, we are simultaneously focused on progressing project newTRON, our enterprise-wide cost reduction initiative that will transform our business and more than offset raw material and fixed cost inflation, enabling us to remain among the lowest cost TiO₂ producers and enhance service to our customers.  Our vertically integrated business model continues to differentiate us from our competitors providing security of supply, a global footprint that we can leverage to our customers’ advantage, and co-products that contribute significant value to our portfolio.  We generated an impressive $150 million in free cash flow in the quarter and repaid approximately $200 million of debt through the end of July.  We are on a journey of transformation, and continue to deliver on our commitments to our stakeholders. We demand a lot of our organization, and our people continue to respond.  We are grateful for the ongoing efforts of our colleagues around the world to deliver safe, quality, low-cost, sustainable tons for our customers.”

Mr. Turgeon concluded, “Producing safe, quality, low-cost, sustainable tons is a key part of our strategy and how we strive to differentiate ourselves.  Though sustainability has long been a part of everything we do at Tronox, we are improving how we disclose our progress and efforts related to our Environmental, Social, and Governance performance as it becomes an increasingly critical focus area for our stakeholders.  This week, we published our 2020 sustainability report that highlights our commitments to improvements for the future.  It provides detail on how we will align ourselves with a global warming scenario below 2° Celsius and achieve an aspirational goal of net zero greenhouse gas emissions and zero waste to external dedicated landfills by 2050.  The report also reinforces our “Journey to Zero” to achieve zero injuries, zero incidents, and zero harm.  We invite all stakeholders to review this report on our website to learn about our accomplishments to date and the aggressive goals we have set for the future.”

Financial Summary for the Quarter Ending June 30, 2021
Tronox reported revenue of $927 million for the second quarter 2021, an increase of 60 percent compared to second quarter 2020 revenues of $578 million.  Income from operations of $150 million compared to $49 million in the year-ago quarter.  Net income attributable to Tronox was $73 million, or $0.46 per diluted share, compared to a net loss attributable to Tronox of $4 million, or $0.03 per diluted share, in the year-ago quarter.  Net income attributable to Tronox in the second quarter 2021 included debt extinguishment costs that totaled $23 million or $0.14 per diluted share.  Excluding these items, adjusted net income attributable to Tronox (Non-GAAP) was $96 million, or $0.61 per diluted share.  Adjusted EBITDA of $237 million increased 67 percent compared to $142 million in the prior-year quarter.

Second Quarter 2021 vs. Second Quarter 2020

• Revenue of $927 million increased 60 percent compared to $578 million, driven largely by improved sales volumes and average selling prices across all products
• TiO₂ sales of $740 million increased 59 percent compared to $466 million; sales volumes increased 45 percent versus the year ago quarter, driven by global market recovery in all regions; selling prices improved 9 percent on a U.S. dollar basis and 6 percent on a local currency basis year over year
• Zircon sales of $121 million increased 78 percent from $68 million; sales volumes increased 78 percent driven by global market recovery, while selling prices increased 1 percent
• Feedstock and other product sales of $66 million increased 50 percent from $44 million in the prior year period, primarily due to an improved pig iron market
• Adjusted EBITDA of $237 million increased 67 percent compared to $142 million, driven by increased sales volumes and prices across all products and improved production costs, partially offset by unfavorable exchange rates and the previously cited operational disruptions in the quarter
• Selling, general and administrative (“SG&A”) expenses were $77 million compared to $80 million in the prior year period
• Interest expense of $36 million decreased from $47 million in the year-ago quarter, due to lower debt levels and reduced interest rates as a result of the first quarter refinancing transactions

Second Quarter 2021 vs. First Quarter 2021

• Revenue of $927 million increased 4 percent compared to $891 million, primarily due to higher TiO₂ and zircon selling prices
• TiO₂ sales of $740 million increased 6 percent compared to $696 million; sales volumes increased 1 percent sequentially, led by North America and Europe; selling prices increased 5 percent sequentially on both a U.S. dollar and local currency basis
• Zircon sales of $121 million decreased 2 percent from $123 million; sales volumes decreased 5 percent, due to reduced sales from excess inventory in the quarter, while selling prices increased 5 percent sequentially
• Feedstock and other product sales of $66 million decreased 8 percent compared to $72 million due to timing as, despite higher pig iron selling prices, some pig iron volumes rolled into the third quarter
• Adjusted EBITDA of $237 million increased 5 percent compared to $225 million, driven primarily by higher selling prices across all products, increased TiO₂ volumes, and improved production costs, partially offset by the previously cited operational disruptions in the quarter and unfavorable exchange rates
• SG&A expenses were $77 million compared to $81 million
• Interest expense was $36 million compared to $50 million, due to lower debt levels and reduced interest rates as a result of the first quarter refinancing transactions

Other Financial Information

• As part of the first quarter refinancing transactions, which included a redemption of our $450 million 5.75% Senior Notes due 2025 on April 1, 2021, the Company incurred $23 million in tax adjusted debt extinguishment costs in the second quarter
• As of June 30, 2021, total debt was $2.8 billion and debt, net of cash and cash equivalents was $2.5 billion
• Liquidity was $767 million as of June 30, 2021, comprising cash and cash equivalents of $303 million and $464 million available under revolving credit facilities
• In the second quarter 2021, capital expenditures were $60 million and depreciation, depletion and amortization expense was $71 million
• Free cash flow for the quarter was $150 million

Webcast Conference Call

Tronox will conduct a webcast conference call on Thursday, July 29, 2021, at 8:00 a.m. ET (New York).  The live call is open to the public via internet broadcast and telephone.

Internet Broadcast:
http://investor.tronox.com

Dial-in Telephone Numbers:

United States: +1.866.270.1533
International: +1.412.317.0797

Conference Call Presentation Slides will be used during the conference call and will be available on our website: http://investor.tronox.com

Conference Call Replay: Available via the internet and telephone beginning on July 29, 2021, 11:00 a.m. ET (New York), until August 4, 2021, 5:00 p.m. ET (New York)
Internet Replay:http://investor.tronox.com
Replay Dial-in Telephone Numbers:
United States: +1.877.344.7529
International: +1.412.317.0088
Replay Access Code: 10158616

Upcoming Conferences

During the third quarter 2021, a member of management is scheduled to present at the following conferences:

• Jefferies Virtual Industrials Conference, August 3, 2021
• Credit Suisse 34th Annual Basic Materials Conference (Virtual), September 13, 2021
• Deutsche Bank’s 29th Annual Leveraged Finance Conference (Virtual), October 4, 2021

Accompanying conference and meeting materials will be available at http://investor.tronox.com

About Tronox
Tronox Holdings plc is one of the world’s leading producers of high-quality titanium products, including titanium dioxide pigment, specialty-grade titanium dioxide products and high-purity titanium chemicals; and zircon. We mine titanium-bearing mineral sands and operate upgrading facilities that produce high-grade titanium feedstock materials, pig iron and other minerals. With approximately 6,500 employees across six continents, our rich diversity, unmatched vertical integration model, and unparalleled operational and technical expertise across the value chain, position Tronox as the preeminent titanium dioxide producer in the world. For more information about how our products add brightness and durability to paints, plastics, paper and other everyday products, visit tronox.com.

Cautionary Statement about Forward-Looking Statements

Statements in this release that are not historical are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements, which are subject to known and unknown risks, uncertainties and assumptions about us, may include projections of our future financial performance including the effects of the COVID-19 pandemic and anticipated synergies based on our growth and other strategies, anticipated completion of extensions and upgrades to our mining and operations, anticipated trends in our business, and anticipated costs and benefits of project newTRON. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance, actual synergies, or achievements to differ materially from the results, level of activity, performance, anticipated synergies or achievements expressed or implied by the forward-looking statements. Significant risks and uncertainties may relate to, but are not limited to, business and market disruptions related to the COVID-19 pandemic, market conditions and price volatility for titanium dioxide, zircon and other feedstock materials, as well as global and regional economic downturns, including as a result of the COVID-19 pandemic, that adversely affect the demand for our end-use products; disruptions in production at our mining and manufacturing facilities; and other financial, economic, competitive, environmental, political, legal and regulatory factors. These and other risk factors are discussed in the Company’s filings with the Securities and Exchange Commission.

Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict all risks and uncertainties, nor can management assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance, synergies or achievements. Neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. Unless otherwise required by applicable laws, we undertake no obligation to update or revise any forward-looking statements, whether because of new information or future developments.

Use of Non-GAAP Information

To provide investors and others with additional information regarding the financial results of Tronox Holdings plc, we have disclosed in this release certain non-U.S. GAAP operating performance measures of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted net loss attributable to Tronox, including its presentation on a per share basis, and a non-U.S. GAAP liquidity measure of Free Cash Flow.  These non-U.S. GAAP financial measures are a supplement to and not a substitute for or superior to, the Company’s results presented in accordance with U.S. GAAP.  The non-U.S. GAAP financial measures presented by the Company may be different from non-U.S. GAAP financial measures presented by other companies. Specifically, the Company believes the non-U.S. GAAP information provides useful measures to investors regarding the Company’s financial performance by excluding certain costs and expenses that the Company believes are not indicative of its core operating results.  The presentation of these non-U.S. GAAP financial measures is not meant to be considered in isolation or as a substitute for results or guidance prepared and presented in accordance with U.S. GAAP.  A reconciliation of the non-U.S. GAAP financial measures to U.S. GAAP results is included herein.

Media Contact: Melissa Zona
+1.636.751.4057

Investor Contact: Jennifer Guenther
+1.646.960.6598

 

 

 

 

 

 

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SOURCE Tronox Holdings plc

IRVING, Texas, July 28, 2021 /PRNewswire/ — Vistra (NYSE: VST) announced today that its Board of Directors has declared a quarterly dividend of $0.15 per share of Vistra’s common stock, or $0.60 per share on an annualized basis. The dividend is payable on September 30, 2021, to shareholders of record as of September 16, 2021. The ex-dividend date will be September 15, 2021.

Media

Meranda Cohn

214-875-8004
[email protected]

Analysts

Molly Sorg

214-812-0046
[email protected]

About 
Vistra

Vistra (NYSE: VST) is a leading Fortune 275 integrated retail electricity and power generation company based in Irving, Texas, providing essential resources for customers, commerce, and communities. Vistra combines an innovative, customer-centric approach to retail with safe, reliable, diverse, and efficient power generation. The company brings its products and services to market in 20 states and the District of Columbia, including six of the seven competitive wholesale markets in the U.S. and markets in Canada and Japan, as well. Serving nearly 4.3 million residential, commercial, and industrial retail customers with electricity and natural gas, Vistra is one of the largest competitive electricity providers in the country and offers over 50 renewable energy plans. The company is also the largest competitive power generator in the U.S. with a capacity of approximately 39,000 megawatts powered by a diverse portfolio, including natural gas, nuclear, solar, and battery energy storage facilities. In addition, the company is a large purchaser of wind power. The company is currently constructing a 400-MW/1,600-MWh battery energy storage system in Moss Landing, California, the largest of its kind in the world. Vistra is guided by four core principles: we do business the right way, we work as a team, we compete to win, and we care about our stakeholders, including our customers, our communities where we work and live, our employees, and our investors. Learn more about our environmental, social, and governance efforts and read the company’s sustainability report at https://www.vistracorp.com/sustainability/.

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SOURCE Vistra

Total Revenues grew
29
%. System Sales grew
14
% and Same-Store Sales were up
5


% in constant currency 

Opened
404
 new stores
; Total stores reached 11,023,
 
an
 increase of
1,069
 stores year over year 

Reported $
233
 million Operating Profit

SHANGHAI, July 28, 2021 /PRNewswire/ — Yum China Holdings, Inc. (the “Company” or “Yum China“) (NYSE: YUMC and HKEX: 9987) today reported unaudited results for the second quarter ended June 30, 2021.

Impact of COVID-19 Outbreak and Mitigation Efforts 

Second quarter operations improved from a year ago. System sales and operating profit grew year over year. System sales growth was led by accelerated new store openings and same-store sales growth. Operating profit growth was further driven by lower commodity prices, and productivity improvements.

The COVID-19 pandemic continued to impact the Company’s operations and results in the second quarter. Same-store sales recovery to pre-COVID levels was interrupted by the Delta variant outbreak in southern China, which started in late May. Local authorities tightened preventive health measures and social distancing requirements. Many communities were locked down. At the peak of this outbreak, approximately 400 of our restaurants were either temporarily closed or provided delivery and takeaway services only. This represents nearly 30% of our restaurants in Guangdong province, which has two of the four tier one cities in China, is the largest economy in China and one of Yum China’s largest markets. Across China, cautious consumer behavior persists as sporadic outbreaks remind consumers of the lingering risks. Same-store dine-in volume is still well below 2019 levels while off-premise occasions continue to grow rapidly. Overall, the pace of recovery varied by region with eastern and western China recovering relatively faster.

Traffic at our transportation and tourist locations improved from the first quarter but remained well below pre-COVID levels. According to government statistics, tourism spending for the three holidays in the second quarter was still down 20% to 40% compared to 2019. The impact was more pronounced for KFC, with its higher mix of stores in transportation and tourist locations.

As we entered July, traffic and sales continue to be pressured by lingering effects of COVID-19, such as reduced travel, a shortened school holiday and regional outbreaks in Yunnan. The latest outbreak in Nanjing, the capital city of Jiangsu province, is still evolving. The Company continues to expect that a full recovery of same-store sales will take time, with the recovery path impacted by regional resurgences and the corresponding public health measures. We will continue to focus on the elements of the business under our control, such as food innovation, compelling value propositions, a focus on customer experience, and operating efficiency, to drive sales and protect margins.

Second Quarter Highlights

• Total revenues increased 29% year over year to $2.45 billion from $1.90 billion (a 17% increase excluding foreign currency translation (“F/X”)).
• Total system sales increased 14% year over year, with increases of 14% at KFC and 16% at Pizza Hut, excluding F/X.
• Same-store sales increased 5% year over year, with increases of 4% at KFC and 11% at Pizza Hut, excluding F/X.
• Opened 404 new stores during the quarter.
• Total store count reached 11,023 as of June 30, 2021, an increase of 1,069 stores over the past year.
• Restaurant margin was 15.8%, compared with 13.7% in the prior year period.
• Operating
  Profit increased 83% year over year to $233 million from $128 million (a 65% increase excluding F/X).
• Adjusted Operating Profit increased 80% year over year to $237 million from $132 million (a 63% increase excluding F/X).
• Effective tax rate was 24.8%.
• Net
  Income increased 37% to $181 million from $132 million in the prior year period, primarily due to the increase in Operating Profit.
• Adjusted Net Income increased 36% to $185 million from $136 million in the prior year period (a 72% increase excluding the net gains of $5 million and $31 million in the second quarter of 2021 and 2020, respectively, from our mark-to-market equity investments; a 55% increase if further excluding F/X).
• Dilute
  d EPS increased 24% to $0.42 from $0.34 in the prior year period.
• Adjusted Diluted EPS increased 20% to $0.42 from $0.35 in the prior year period (a 52% increase excluding the net gains from our mark-to-market equity investments in the second quarter of 2021 and 2020; a 37% increase if further excluding F/X).
• Results include the consolidation of Huang Ji Huang since April 2020, and Suzhou KFC since August 2020.

 

 

CEO
and CFO Comments

Joey Wat, CEO of Yum China, commented, “We delivered another quarter of solid performance. Pizza Hut achieved stellar performance and is expected to become another growth engine. KFC remained resilient and drove robust system sales and operating profit growth. Yum China continues to accelerate store network expansion. In less than one year, we increased total store count from 10,000 to over 11,000 stores. With 719 gross new stores opened in the first half, we now expect to open around 1,300 new stores in 2021. In addition to unit growth, we are focused on driving consumers back to the stores with our great food and compelling value offers. We are also capturing off-premise demand with our hybrid delivery model and increasing network density. Leveraging our vast membership base and digital platform, we are more nimble than ever.”

Wat continued, “Despite the challenges posed by the pandemic, we are well-positioned to capture the market opportunities in China. Consumers love the delicious food and value-for-money that KFC and Pizza Hut offer. COFFii & JOY and Lavazza are also making good progress. Our digital platform and operational excellence help to enhance customer experience. We are committed and confident in achieving sustainable growth for many years to come.”

Andy Yeung, CFO of Yum China, added, “We achieved solid system sales and operating profit growth, both comparing to the prior year and to pre-pandemic 2019 levels, even though the recovery trajectory in the quarter was disrupted by the Delta variant outbreak in southern China. On a two-year basis, Pizza Hut’s system sales growth returned to positive and KFC’s system sales grew an impressive 7% led by rapid new store openings. Our strong operating profit growth reflected operational excellence and continued improvement in operating efficiency.”

Yeung continued, “With the lingering effects of the pandemic, we continue to expect full recovery of same-store sales to pre-pandemic 2019 levels to take time, with a recovery path that is nonlinear and uneven. We plan to invest more in marketing, value proposition and customer service to drive traffic. In addition, rising commodity prices will become a headwind and likely turn into inflationary pressure in the later part of this year. Recent wage increases will also put more pressure on the margins for the balance of the year. Nevertheless, we are committed to driving long-term returns for our shareholders. After careful deliberations that balanced the COVID-19 risks and our strong liquidity position, the Board of Directors has approved the resumption of share repurchases.”

Dividends
 and Share Repurchases

• The Board of Directors declared a cash dividend of $0.12 per share on Yum China’s common stock, payable as of the close of business on September 16, 2021 to shareholders of record as of the close of business on August 25, 2021.
• The Board of Directors has approved the resumption of share repurchases.

Digital and Delivery 

• The KFC and Pizza Hut loyalty programs exceeded 330 million members combined as of quarter-end. Member sales accounted for approximately 61% of system sales in the second quarter of 2021.
• Delivery contributed approximately 30% of KFC and Pizza Hut’s Company sales in the second quarter of 2021, an increase of approximately one percentage point from the prior year period as consumers are still cautious about dine-in.
• Digital orders, including delivery, mobile orders and kiosk orders, accounted for approximately 85% of KFC and Pizza Hut’s Company sales in the second quarter of 2021.

New-Unit Development and Asset Upgrade

• The Company opened 404 new stores in the second quarter of 2021, mainly driven by development of the KFC brand and acceleration of the Pizza Hut brand.
• The Company remodeled 316 stores in the second quarter of 2021.

Restaurant Margin

• Restaurant margin was 15.8% in the second quarter of 2021, compared with 13.7% in the prior year period, primarily attributable to improvement in sales, favorable commodity prices and higher productivity, partially offset by lower temporary relief provided by landlords and government agencies and wage inflation.

2021 Outlook

The Company is updating the following fiscal year 2021 targets:

• To open approximately 1,300 gross new stores, an increase compared to the original target of 1,000, primarily due to the acceleration of KFC and Pizza Hut store expansion.
• To make capital expenditures of approximately $700-800 million, an increase compared to the original target of $600 million, as a result of additional new stores and stepped-up investment in infrastructure and digitalization.

Other Updates

• On June 8, 2021, the Company announced that it has signed the Business Ambition for 1.5^oC Commitment Letter, as part of the global Science Based Targets initiative (SBTi). In committing to the SBTi, the Company pledges to align its business with the most ambitious aim of the Paris Agreement, to limit global temperature rise to 1.5 ^oC above pre-industrial levels and reach net-zero global emissions by 2050. The Company will also disclose its climate impact through CDP.
• On June 18, 2021, the Company issued its 2020 Sustainability Report, which highlights Yum China’s commitment to sustainability and provides an overview of progress made in 2020 towards its sustainability goals.
• The Company will host a virtual Investor Day on Thursday, September 23, 2021 (Beijing/Hong Kong Time). A webcast will be available at Yum China’s Investor Relations website at http://ir.yumchina.com.

Note on Non-GAAP Adjusted Measures

Reported GAAP results include Special Items, which are excluded from non-GAAP adjusted measures. Special Items are not allocated to any segment and therefore only impact reported GAAP results of Yum China. See “Reconciliation of Reported GAAP Results to Non-GAAP Adjusted Measures” within this release.

Conf
erence Call

Yum China’s management will hold an earnings conference call at 8:00 p.m. U.S. Eastern Time on Wednesday, July 28, 2021 (8:00 a.m.Beijing/Hong Kong Time on Thursday, July 29, 2021).  

A live webcast of the call may be accessed at https://edge.media-server.com/mmc/p/mn2iyycc.

To join by phone, please register in advance of the conference through the link provided below. Upon registering, you will be provided with participant dial-in numbers, a passcode and a unique registrant ID.

Pre-registration Link:              http://apac.directeventreg.com/registration/event/5196089
Conference ID:                       5196089

A replay of the conference call will be available two hours after the call ends until 10:00 a.m. U.S. Eastern Time on Thursday, August 5, 2021 (10:00 p.m.Beijing/Hong Kong Time on Thursday, August 5, 2021) and may be accessed by phone at the following numbers:

U.S.:                                           1 855 452 5696
Mainland China:                         400 602 2065 or 800 870 0206
Hong Kong:                                +852 3051 2780
U.K.:                                           0808 234 0072
International:                              +61 2 8199 0299

Replay access code:                  5196089

Additionally, this earnings release, the accompanying slides, a live webcast and an archived webcast of this conference call will be available at Yum China’s Investor Relations website at http://ir.yumchina.com.  

For important news and information regarding Yum China, including our filings with the U.S. Securities and Exchange Commission and the Hong Kong Stock Exchange, visit Yum China’s Investor Relations website at http://ir.yumchina.com. Yum China uses this website as a primary channel for disclosing key information to its investors, some of which may contain material and previously non-public information.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including under “2021 Outlook.” We intend all forward-looking statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the fact that they do not relate strictly to historical or current facts and by the use of forward-looking words such as “expect,” “expectation,” “believe,” “anticipate,” “may,” “could,” “intend,” “belief,” “plan,” “estimate,” “target,” “predict,” “project,” “likely,” “will,” “continue,” “should,” “forecast,” “outlook” or similar terminology. These statements are based on current estimates and assumptions made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable under the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Forward-looking statements include, without limitation, statements regarding the future strategies, growth, business plans, investment, dividend and share repurchase plans, earnings, performance and returns of Yum China, anticipated effects of population and macroeconomic trends, the expected impact of the COVID-19 pandemic, the anticipated effects of our innovation, digital and delivery capabilities and investments on growth and beliefs regarding the long-term drivers of Yum China’s business. Forward-looking statements are not guarantees of performance and are inherently subject to known and unknown risks and uncertainties that are difficult to predict and could cause our actual results or events to differ materially from those indicated by those statements. We cannot assure you that any of our expectations, estimates or assumptions will be achieved. The forward-looking statements included in this press release are only made as of the date of this press release, and we disclaim any obligation to publicly update any forward-looking statement to reflect subsequent events or circumstances, except as required by law. Numerous factors could cause our actual results or events to differ materially from those expressed or implied by forward-looking statements, including, without limitation: whether we are able to achieve development goals at the times and in the amounts currently anticipated, if at all, the success of our marketing campaigns and product innovation, our ability to maintain food safety and quality control systems, changes in public health conditions, including the COVID-19 pandemic and regional resurgences, our ability to control costs and expenses, including tax costs, as well as changes in political, economic and regulatory conditions in China. In addition, other risks and uncertainties not presently known to us or that we currently believe to be immaterial could affect the accuracy of any such forward-looking statements. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. You should consult our filings with the Securities and Exchange Commission (including the information set forth under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q) for additional detail about factors that could affect our financial and other results.

About Yum China Holdings, Inc.

Yum China Holdings, Inc. is a licensee of Yum! Brands in mainland China. It has exclusive rights in mainland China to KFC, China’s leading quick-service restaurant brand, Pizza Hut, the leading casual dining restaurant brand in China, and Taco Bell, a California-based restaurant chain serving innovative Mexican-inspired food. Yum China also owns the Little Sheep, Huang Ji Huang, East Dawning and COFFii & JOY concepts outright. In addition, Yum China has partnered with Lavazza to explore and develop the Lavazza coffee shop concept in China. The Company had 11,023 restaurants in over 1,500 cities at the end of June 2021. Yum China ranked # 363 on the Fortune 500 list and was named to TIME100 Most Influential Companies list in 2021. Yum China has been named the Industry Leader for the Restaurant & Leisure Facilities Industry in the 2020 Dow Jones Sustainability Indices. In 2021, Yum China was named to the Bloomberg Gender-Equality Index and was certified as a Top Employer 2021 in China by the Top Employers Institute, both for the third consecutive year. For more information, please visit http://ir.yumchina.com.

 

 

 

 

 

 

 

 

 

In this press release:

• The Company provides certain percentage changes excluding the impact of foreign currency translation (“F/X”). These amounts are derived by translating current year results at prior year average exchange rates. We believe the elimination of the F/X impact provides better year-to-year comparability without the distortion of foreign currency fluctuations.
• System sales growth reflects the results of all restaurants regardless of ownership, including Company-owned, franchise and unconsolidated affiliate restaurants that operate our restaurant concepts, except for non-Company-owned restaurants for which we do not receive a sales-based royalty. Sales of franchise and unconsolidated affiliate restaurants typically generate ongoing franchise fees for the Company at an average rate of approximately 6% of system sales. Franchise and unconsolidated affiliate restaurant sales are not included in Company sales in the Condensed Consolidated Statements of Income; however, the franchise fees are included in the Company’s revenues. We believe system sales growth is useful to investors as a significant indicator of the overall strength of our business as it incorporates all of our revenue drivers, Company and franchise same-store sales as well as net unit growth.
• Effective January 1, 2018, the Company revised its definition of same-store sales growth to represent the estimated percentage change in sales of food of all restaurants in the Company system that have been open prior to the first day of our prior fiscal year, excluding the period during which stores are temporarily closed. We refer to these as our “base” stores. Previously, same-store sales growth represented the estimated percentage change in sales of all restaurants in the Company system that have been open for one year or more, including stores temporarily closed, and the base stores changed on a rolling basis from month to month. This revision was made to align with how management measures performance internally and focuses on trends of a more stable base of stores.
• Company sales represent revenues from Company-owned restaurants. Company Restaurant profit (“Restaurant profit”) is defined as Company sales less expenses incurred directly by our Company-owned restaurants in generating Company sales. Company restaurant margin percentage is defined as Restaurant profit divided by Company sales.

Reconciliation of Reported GAAP Results to Non-GAAP Adjusted Measures

(in millions, except per share data)

(unaudited)

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) in this press release, the Company provides non-GAAP measures adjusted for Special Items, which include Adjusted Operating Profit, Adjusted Net Income, Adjusted Earnings Per Common Share (“EPS”), Adjusted Effective Tax Rate and Adjusted EBITDA, which we define as net income including noncontrolling interests adjusted for income tax, interest income, net, investment gain or loss, certain non-cash expenses, consisting of depreciation and amortization as well as store impairment charges, and Special Items.

The following table set forth the reconciliation of the most directly comparable GAAP financial measures to the non-GAAP adjusted financial measures.

The Company excludes impact from Special Items for the purpose of evaluating performance internally. Special Items are not included in any of our segment results. In addition, the Company provides Adjusted EBITDA because we believe that investors and analysts may find it useful in measuring operating performance without regard to items such as income tax, interest income, net, investment gain or loss, depreciation and amortization, store impairment charges, and Special Items. Store impairment charges included as an adjustment item in Adjusted EBITDA primarily resulted from our semi-annual impairment evaluation of long-lived assets of individual restaurants, and additional impairment evaluation whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. If these restaurant-level assets were not impaired, depreciation of the assets would have been recorded and included in EBITDA. Therefore, store impairment charges were a non-cash item similar to depreciation and amortization of our long-lived assets of restaurants. The Company believes that investors and analyst may find it useful in measuring operating performance without regard to such non-cash item.

These adjusted measures are not intended to replace the presentation of our financial results in accordance with GAAP.  Rather, the Company believes that the presentation of these adjusted measures provides additional information to investors to facilitate the comparison of past and present results, excluding those items that the Company does not believe are indicative of our ongoing operations due to their nature. 

 

 

 

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SOURCE Yum China Holdings, Inc.